Tanzania sales lift ARM’s profit 10pc

Corporate News

President Jakaya Kikwete has said Tanzania will not quit the East African Community. PHOTO|FILE 

By David Herbling

In Summary

• Nairobi bourse-listed cement maker said after tax profit rose to more than Sh1.3 billion in the year to December 2013 compared to Sh1.2 billion a year earlier, aided by growing sales from its Dar es Salaam factory that has marked first full year of operation.
• ARM Cement, which also blends fertiliser, saw group sales grow 24 per cent to hit Sh14.1 billion largely attributed to a sales boom in Tanzania and regional export markets.
• As a result of increased competition brought about by new players such as Savannah, National and Mombasa, cement prices have stayed at between Sh630 and Sh700 per 50-kilogramme bag in Kenya.

ARM Cement’s full-year net profit rose 10 per cent on higher turnover as Tanzanian sales went up one-quarter, defying an industry decline that has seen other firms report lower earnings for 2013.

The Nairobi bourse-listed cement maker said after tax profit rose to more than Sh1.3 billion in the year to December 2013 compared to Sh1.2 billion a year earlier, aided by growing sales from its Dar es Salaam factory that has marked first full year of operation.

ARM Cement, which also blends fertiliser, saw group sales grow 24 per cent to hit Sh14.1 billion largely attributed to a sales boom in Tanzania and regional export markets.

“The Dar es Salaam plant, which had a full year of operation, was the main driver of the group’s growth in earnings. Cement volumes in Kenya remained stable,” said Pradeep Paunrana, chief executive of ARM Cement.

“The profit margins are expected to improve after the Tanga clinker plant becomes operational in the second half of this year.” ARM has increased dividend pay by a fifth to Sh0.60 per share compared to 2012’s payout of Sh0.50, making it a boon to shareholders who enjoyed a share split in the ratio of 1 to 5 last year.

The firm’s performance last year is in stark contrast with Bamburi Cement which saw its net profit plunge by a quarter as export sales to regional markets sagged on increased competition.

Bamburi, the region’s largest cement maker with a capacity of 2.6 million tonnes per annum, posted Sh3.6 billion after-tax profit for the year ended December 2013 compared to Sh4.8 billion recorded a year earlier.

The Lafarge subsidiary saw cement sales dip 9.5 per cent to Sh33.9 billion attributed to lower revenues from the Kenyan market as well as the eastern Africa export market.

But Bamburi sought to appease shareholders by increasing dividend payout by Sh0.50 to Sh11 per
share.

East African Portland Cement Company’s after tax profit fell 43.9 per cent to Sh183 million in the half-year to December 2013 weighed down by flat sales and spiralling operational costs.

Mr Paunrana has been at the helm of ARM since 1984, transforming the small producer of agricultural lime into Kenya’s second biggest cement maker. He listed the firm on the NSE in 1997.

His tenure has seen the ARM’s sales nearly triple in the last five years from Sh5.1 billion in 2009 to last year’s Sh14.1 billion. Its net profit has more than doubled in the period from Sh645.7 million in 2009 to Sh1.3 billion in 2013.

As a result of increased competition brought about by new players such as Savannah, National and Mombasa, cement prices have stayed at between Sh630 and Sh700 per 50-kilogramme bag in Kenya.

Tuesday, the government announced the licensing of Dangote to set up a Sh34 billion cement factory in a move likely to raise production and competition.

hdavid@ke.nationmedia.com